Check yo'self before you wreck your credit

By Erin Bothwell | March 30, 2017 1:26am

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by Julia Cramer / The Beacon

Your grandparents have it. Your professors have it. Your friends have it. Fr. Mark Poorman probably has it. No, not gingivitis or the latest iPhone. Credit. And you should too.

Alright, you’re thinking, I’ll get credit some day, but I can just wait until I’m a “real” adult to build it. Wrong. You needed to sprint to your bank or credit union and start building your credit yesterday. You will need credit at some point, so it’s better to start now.

If you’ve never had a credit card, a car payment or a lease on an apartment/house, you currently have a credit of 0, which is neither good nor bad. But it’s time to put your big kid pants on and build that credit from neutral to GREAT.

If you think you are above us mere mortals and have somehow been gifted with divine credit, check yourself. No, literally. Check your credit score. You can check your credit through TransUnion, Experian, or Equifax (we recommend these sites because usa.gov does). Checking your credit this way will count as a soft inquiry, and they won’t bruise your credit at all. Hard inquiries, by certain financial institutions, will lower your credit.

Don’t let your goose egg credit score keep you from building your credit. Keep in mind if you ever want to take out a loan (aka borrow money) for a house, or a car or whatever else people take out loans for, you should have good credit. Would you let someone borrow money from you if you knew they wouldn’t pay it back? No? Most banks wouldn’t either.

Your credit score tells other people that you are fiscally responsible, it says “I’m trustworthy! I can pay my bills on time!” It’s basically your money resume. For example, with Portland’s tight housing market, many landlords will want to check your credit to make sure you’ll be a good tenant. If you don’t have good credit, banks are far more likely to treat you like dirt. They can offer you loans with awful interest rates, and you’ll just have to be grateful they’re even speaking to you, because they think you are a dirt person.

To build credit, you will need a credit card. Yes, it’s true you can go into debt if you have a credit card, but only if a) you spend more than you have or b) you fail to pay your bill on time and allow interest to add up. As long as you’re frugal with your card, you shouldn’t run into any problems.

So call up your bank and inquire about building your credit. Your first credit card will probably have a 500 dollar limit. You can’t spend more than your limit or you will max out your card, but you never have to spend your limit (in fact, you hopefully will always spend below your limit because, duh). Try to only spend a portion, like 20 percent, of your available limit, because getting close to your limit will temporarily lower your credit score. Your limit will increase as your credit builds.

Always pay your bill on time. If you’re really worried about overspending, just use your card for gas or essentials, like cereal and tampons. Buy the things you normally would. A credit card is not a free pass into the world of caviar and haute couture.

Also, don’t be a butt or it will impact your credit. Overdue library books, and unpaid parking tickets are two of the things that can impact your credit score. Be a saint, not because you’re a good person but because you want your credit to go up (Yikes. This is beginning to sound like an episode of Black Mirror. Okay, be a good person for the sake of being good… and because it’ll help your credit).

The best tip for owning a credit card responsibly: get one with the intention of building credit, not with the intention of spending money you don’t have right now. Think of credit cards as a life hack to building perfect credit. Put big expenses that you’ve already saved up for in your checking account on your credit card and then immediately pay your bill with the money in your checking or savings account. This way you’re funding that awesome trip to Cabo from money you’ve earned, not imaginary money. But you get to add in the fun perk of building credit.

When it comes to your financial future, you’ve got to play the long game. It takes years to build good credit (about seven to be exact). Yes, it’ll take some extra phone calls and form filling to get a credit card now, but your future self will thank you. Most importantly, don’t be discouraged if your credit card application is denied. You can always reapply later. Your future depends on it. 

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